Yeah, I cover the internet sector here at Citi, and this is one of my favorite conversations. We have DoubleVerify CEO, Mark Zagorski. We have DoubleVerify CFO, Nicola Allais. Is that correct?
That's right.
Is that the right way to say it? And there's just so much to talk about. We saw each other a few months ago, I guess-
Yeah
... during the summertime. I think most people know by now what DoubleVerify does. We'll just say measurement, brand suitability, attention, there's all sorts of things. Suffice it to say, sort of a required if you're a platform, if you're a brand, to make sure your brand is safe, and now it's across social and video and retail media, and the list goes on and on. So with that, Mark, Nicola, welcome to Citi's Tech Conference. Let's kick this off with macro, and so we'll go back and forth here and just, you know, this last quarter, we were pretty excited. There was a lot of good things going on from a macro perspective, but then there was a few cracks from a brand perspective as well. And so because DoubleVerify sits in a really interesting space-
Mm-hmm
... that you see the open web, the closed web, across video, non-video, just how would you characterize the current mood within online advertising? And talk to us about that.
Yeah, I mean, I think you know, we're in a period now where, from an advertiser's perspective, it's cautiously optimistic, right? So, I wouldn't say that it's, you know, exuberant when it comes to ad spend, but advertisers feel okay, and what's happening when it comes to digital advertising is we're definitely seeing the era of winners and losers starting to emerge, right? You're seeing dollars starting to move into social in a much more aggressive way. You're seeing connected television and retail media networks growing, and you know, what they're doing is, in many cases, taking away from what people would consider traditional publishers, right? So news publishers, people like that. I mean, I think that trend is continuing over time, so you see certain platforms doing incredibly well.
You see other platforms struggling and traditional media platforms struggling on the receiving side of dollars, and then you see the brands that are spending, I think, like I noted, are cautious, but they're also looking to drive performance, and that's becoming a bigger and bigger play here. You know, everything needs to have a return. Everything needs to have a return on investment, and, you know, digital is now not... Digital media is media. Like, for the most part, everything's digital-
Right
... and everything's trackable. So I think when we look at the mood right now, it's, "Yeah, I'm gonna spend. I feel good about spending. I'm a little worried about elections. I'm a little worried about what will happen with the economy," but ultimately, if I can drive results, and I can track that result, then I'm okay spending.
We got coming out of this past quarter, Meta had tremendous results. Google Search had very good results, but then YouTube, not as much.
Yeah.
Relative to expectations, they were fine.
Yeah.
But there, there's some concern about brand.
Mm-hmm.
You used the term cautiously optimistic to that, and then also the importance of performance. Anything to call out between performance or DR or brand or just cautiously optimistic across the space?
I think, you know, again, it goes back to that idea of there's some winners, and then there's people who are struggling a bit, and the winners are the platforms that are able to actually close the loop-
Mm
... that can show an advertiser that their spend is actually performing. And I think, you know, Meta has been really good at that for the last few years. You'll see the emergence of retail media networks, as I mentioned, because those are specifically built to drive results. I mean, the entire, you know, universe of retail media networks, and if folks aren't familiar with that, that's where people like Kroger or Amazon or even Uber have built advertising businesses on top of their core business. But the beauty of those is because they have so much data, they can show the efficacy of the advertising on their platforms and how it actually drives a transaction. Amazon has obviously been the, you know, the-
Sure
... the big winner there.
Pioneer.
And they're also, you know, they're reaping the benefits of that success as well.
So, let's transition then into DoubleVerify-
Mm-hmm
... because all these newer, like, retail media call it new, newer format, social, CTV, et cetera, you know, DV's core model and value prop, I just wanna get that level set with everybody. We know it's measurement, verification-
Mm-hmm
... brand suitability. Just talk to us how these newer formats that DV can now measure have expanded. Talk to us about the value prop overall, and then how the business has expanded over the last, call it two to three years, now that social's a bigger part, you know, CTV is a bigger part, et cetera.
Yeah, you know, we started off, you know, the core premise of DV was to protect digital ad spend. Initially in the open web, and the open web is an area where there's lots of opportunities for impressions, right? So there was a data-driven impression universe in the open web, but there was a lot of concerns about lack of transparency. Where's my ad showing up? What kind of content is it showing up next to? That's where we started to ensure that the buyers and sellers of media in the open web, that transaction was protected, that there was no fraud engaged, that the ads were viewable and ended up in a brand safe or brand suitable environment.
Fast-forward to today, you know, that was 10 years ago, over 10 years ago when we started, you know, more and more of those dollars, or actually a vast majority of those dollars are moving into platforms like social and like CTV, which have their own challenges. So it's, in some cases, it's not the lack of transparency. You know you're getting an ad on Meta, right? But you're more concerned about what's the tone and tenor of the content in a social network. It's user-generated content, right? So we ensure that ads are from a brand end up in a content that makes sense for that advertiser in social. So you've seen the emergence of social, and our products have adapted to social environments. Products, platforms like TikTok, for example, which didn't exist.
Right
... at scale, four or five years ago, is now one of our fastest-growing social segments because TikTok has incredibly high engagement with consumers, but it has lots of challenging content, right? So brands need to be there, but they don't wanna be around stuff that is not appropriate for them. We play a role in ensuring that their ads don't show up in those environments. So you've got that emerging. You've got the connected TV world emerging, which again, several years ago, was not a big factor in advertising when there was only maybe one or two ad plays in CTV, right? There was YouTube TV, and then there was Hulu. Now, you've got every major platform, from Disney to HBO, to Paramount, all being ad-supported, right?
Brand safety, not as much of an issue, but things like viewability is an issue. Now, people wouldn't assume that viewability is a challenge in CTV, but we found that many ads were being served to CTV, connected television devices, when the actual set was off, right? It's a different world. There's a TV set today is basically just a big computer, right? A screen. When you turn that screen off, the computer can still run in the background-
Mm.
- which means ads can still be served there, too. So is that ad viewable if it's delivered while the TV set is off? Obviously, no. So we measure things like that as well. So each new emerging media source comes with its own challenges for advertiser, whether it's viewability on CTV, brand suitability in social environments, you know, or even, you know, fraud transactions or attention engagement, across retail media networks. There's always a challenge for advertisers to know that their spend is insured and verified.
So I was gonna ask about win rates. We'll get to that in a second.
Sure.
I think we have all these different topics, and we'll open the queue up for questions as well. But Mark, if I had to take a step back, and you said ten years ago, open web, now we're in social, CTV, retail media, and of course, open and everything else that comes with it-
Yeah.
Would love to hear your thoughts, maybe bigger picture, opportunity set. What gets Mark Zagorski super excited?
Yeah.
We've been talking about CTV. I mean, we've been friends, known each other for eight plus and maybe more than that, and so it'll tell you how old I am. So just all those things, like, help us understand the broader idea and opportunity around, is it social? Is it video, CTV, retail media, sort of newer? How do you think about this?
Yeah. So I think, you know, the biggest opportunity for DV as a company right now still remains in social.
Okay.
You know, we've run some estimates. We're probably only measuring and verifying around 5% across social. We have an activation tool on YouTube right now, which is actually doing really well. But on the other platforms, TikTok, Facebook, Snap, and others, we don't have solutions there yet. So to me, that's a huge opportunity, considering how many ad dollars go into social. So that's a big opportunity for us. You mentioned retail media networks. I think we're-
I'll come back to that. I think the pre-bid's a really key part-
Yeah
... and you talked about closing the loop and the importance of just the ability to do to prove performance and ROAS and everything else.
Yeah.
And so we have pre-bid and activation. I think, DV has post-bid solutions as well-
We do
I believe.
Across social.
Just talk to us more about the ability to close the loop and how that is differentiated, because we all know social is gigantic.
Yeah.
We know, to your point, 60% of non-search or, you know-
Yeah
... or something around 60%-70%. Talk to us about pre-bid, the importance there?
Yeah. So when we look at our pre-bid solutions in the Open Web, we have a solution called ABS, with Authentic Brand Suitability, and it links it. The way it works with our measurement is you think about, we capture data in measurement and says, "Hey, here are violations that we've seen." We're able to take those violations and that data and pump it into our pre-bid solution, so the advertiser then can filter out those types of impressions in the next time that they bid.
Okay.
This goes in the open web, that gets implemented through platforms like The Trade Desk, through DV360, through Microsoft Xandr, through Amazon. So think of that as being the filter that we have as an activation of pre-bid in the open web, and then we're able to measure and adapt. You create this virtuous cycle of optimization, which takes garbage out of the system and allows the advertising to perform better. We talk a lot about protection, but ultimately, when we take pre-bid activation and match it with post-bid measurement, we're actually driving performance, right? We started this conversation, what are advertisers looking for right now? They're looking for performance and ROI, right? It squarely puts us in the world of not just protecting ad spend, but helping it perform. Now let's fast-forward to the social universe.
Social, to date, for the most part, we've really focused on measurement. Let's get the data in, let's find the violations. In some cases, we can block the ad before it gets delivered, but really, it's verification measurement, you know.
Okay.
We launched a solution in YouTube to allow us to do filtering, right? So it works with our measurement tool now. And the value of that is immense. And if you look at, for example, our YouTube measurement penetration in our top 100 customers, it's over 90%, right? So when advertisers can get measurement and put it together with activation, it's this amazing package of performance, right? And we know we can penetrate. If you look at, for example, our Meta penetration right now, where we don't have pre-bid, it's only around 50% of our top 100. So we know that one of the keys to unlocking value in measurement is having an activation solution there as well. That's why we look at it as a big opportunity. You know, we're working on those channels right now to be able to provide those types of solutions.
But we know pre-bid or activation solutions and post-bid measurement solutions work really well together 'cause they drive performance.
And, right, and that, and that's key. And sticking on the social theme, you talked, I think, about TikTok, you talked obviously about Meta. Would love to hear about where are brands focusing their time on these platforms? Obviously, TikTok's all video.
Mm.
Meta, we think Reels, and we all know Reels is driving a lot of this.
Yep. Yeah.
Would love to hear your thoughts on what you're seeing between the feed, maybe stories, if you're Meta, or Reels or TikTok or, you know, the-
It's all short-form video.
... short-form video. It's all short-form video.
I mean, that is the future. That is where advertisers wanna spend. That has incredibly high engagement and attention. It drives tons of volume. And it's, you know, you get a little bit of the sight, sound, and motion from television, right? Along with, the, you know, engagements and the customization that you'll get in a social media environment. So you bring those two things together, it is a powerhouse. That's where advertisers wanna be.
Do they care of the platform? Is one platform better than- or I'll ask from a DoubleVerify perspective-
Yeah
... you know?
I mean, we see impressions across all the platforms, and really, I think advertisers, I don't think they have a preference-
Mm
... really, when it comes to short-form video. It's wherever they feel that the creators are most active. But every creator now is pretty much on every platform, right?
Yeah, yeah.
They'll build something and distribute across TikTok. So, creators, they follow creators. Technology of the platforms does matter a bit, so the ability for the platforms to target. We think that our ability to be engaged with those platforms and be able to verify is important as well. But considering that we're across TikTok, we're across Reels, we're across Shorts, there's really no place that we aren't.
Mm-hmm.
You know, that's not a real differentiator for the platforms yet, but it's great for us.
Yeah.
Right? Because they feel like if they don't have verification, then it puts them at a disadvantage. So I don't think there's a real... I've not seen a real preference per platform right now.
I don't know if you... So we talked about the 5% of social impressions that DV covers, maybe that, you mentioned that earlier, that was a 2023 metric. Does that get to 100% over time? Do the networks allow you to get there, or the platforms?
I mean, we see every impression that our advertisers are engaged with.
Yeah.
So it's not the platforms.
Okay.
It's how much advertising engagement that we have. I don't think we get to 100%, and the reason why is this. DV is an enterprise solution, and we work with the largest brands in the world. So think Unilever, Mondelez, Pepsi, you know, these are huge brands, Colgate. Meta has 10 million advertisers, right? A big portion of their business, and a lot of the platform's business, is self-serve-
Yeah
... SMB kind of engagements. That's probably not a place that we're gonna be at anytime soon. Doesn't mean we can't be there, but I think, initially right now, we've got enough enterprise clients to go after, that we're really focusing on the big brands.
Love it. I cut you off on the CTV comment. We talked about all these different platforms, and-
You, you cut me off. I keep talking, you know what? You better cut me off, so.
Good. Maybe the bridge to CTV is YouTube.
Mm-hmm.
We talked about YouTube before with pre-bid or what have you, but I thought the comment around. I think Performance Max and the Demand Gen are now live. Getting back to the importance of performance, the importance of closing the loop, just talk to us about how brands are looking at YouTube and relying on DV to get to that performance side.
Yeah, so, you know, look, I think all the platforms, whether it's PMax or what, Meta's doing with their, you know, automated, you know, performance solutions, all those platforms are focused on driving results. You know, the idea of branding without an ROI on the other side-
Yeah, can't do it.
... doesn't exist anymore. What we do plays a role in that because, you know, there's one aspect that's usually non-negotiable, and that's the brand safety and suitability, right? That is an inherent part of what advertisers look at as performance. "Yes, I wanna perform, but I don't wanna perform if I'm next to content that I'm not comfortable with," right? And for the most part, content that's not brand safe or brand suitable doesn't perform anyways, right?
Yeah.
Videos that are incredibly incendiary don't sell soap, right? And Unilever doesn't wanna be next to those-
That still exists today.
Yeah.
It's. I got served a few things about that recently.
Yeah.
... That's helpful with the brand safety suitability, and you need to have brand. Let's talk about CTV.
Yep.
I think bigger picture, there's just a lot of debate going into this year. We heard and we saw Amazon Prime now open up. Every single platform has an ad-supported tier for the most part, and so there's all this challenge around, okay, we have more inventory, pricing might come down. I thought it was fascinating this past quarter. I think DoubleVerify reported 55% growth in CTV measurement volumes.
It did
... which talks about the volume and the demand here. You know, where are you seeing this increase in volume? And I'll stop there and not lead the witness here, so to speak, 'cause I had another question, just bigger picture.
Yeah, no, so we consider... It's interesting, 'cause YouTube is both social and CTV, right?
Right, right.
It kind of fits into both universes. YouTube is still the largest portion of our CTV measurement business, but we've seen really nice growth with Netflix since it's grown from a very small base, and we're across. We measure every major CTV platform from, you know, Warner and HBO to Disney, so, you know, we've seen growth across all of them.
Mm-hmm
... really, and the interesting about it, which you brought up, is the flood of inventory into the market is not a non-factor. I mean, it has absolutely impacted CPMs. I mean, Amazon deciding one day just to say, "Hey, we're gonna flip on," you know-
Yeah
... literally billions of impressions, changed the market overnight.
Is Amazon fully live? I know they're fully live, but meaning that, I, you know, they flipped it on, or they announced it in February, but I feel as if a lot of their new programs are coming on-
Oh, they're holding back.
They're holding back?
Oh, yeah. They haven't even started to actually-
Right
... put real volumes of impressions.
So the pressure on CPMs is sort of-
Just getting started.
... freak.
Yeah. Yeah, I mean, I think I would say, you know, two or three years ago, CTV was a seller's market.
Mm.
It was absolutely a seller's market. They could demand pricing that they wanted. They didn't need to provide transparency in many ways, but I think that's changing. Which ultimately, you know, from a selfish perspective, benefits us.
Sure, makes sense.
Because we're in the business of transparency.
Yeah
... and impressions.
Yeah.
Because we charge a fixed rate per impression, so if CPMs go down, impressions go up.
Yeah.
Right? That's a good thing for us.
I agree. We, we've talked one-on-one about show-level transparency. I think just talk to us how that maybe is changing the purchasing path of, of CTV, and for those in the audience, making sure, like, right now you buy on audience or help us understand show level from where we are today.
Yeah, so if you take a look at how CTV is bought today, it's very different than how linear TV was purchased in the past. Linear TV, you bought American Idol on Thursday nights-
Right
... you knew you got a guaranteed spot there. You bought the show. CTV, you don't buy the show. You might get the show that you want-
Mm
... right, but you're really buying the audience. And most CTV platforms are very concerned about selling the show, and the reason why is they have huge catalogs, right? And a majority of their viewing goes to their long tail, and they can't sell thousands of programs individually, right?
Yeah.
So they sell on a genre basis, they sell on an audience basis. Good for the platforms, challenging for advertisers. Because advertisers wanna know, "Hey, I want Stranger Things. Hey, I, you know, I want, you know, Bosch." Actually, people who want Bosch are old guys like me.
You know, I really like Bosch, yeah.
You know, you have to be, like, a 60-year-old white guy to like Bosch, so it's, you know, but advertisers want specific shows, they don't get that and why I mentioned before the idea of this becoming a buyer's market versus a seller's market is, in the past, the platforms didn't need to provide that transparency.
Mm
... or that accuracy. You know, you're gonna get an audience, but you're not gonna get the specific show, and we're not gonna really tell you where you ran. That's changing because of the amount of inventory that's coming to the market. What that means for DV is currently, we don't get what's called show-level data. We don't get granular data on where impressions ran on a show. We get very broad data on the application itself. Earlier this year, we launched a partnership with NBCUniversal to start providing that data.
Okay
... on a granular basis. And we think that the platforms are starting to realize that that data is gonna need to be put out into the measurement world, into the verification world, for them to compete. Because every other platform, digital platform, can show you where you've run, right? Even short-form video shows you, "These are the types of videos you ran against. Here's the video you ran against. Did I run against this creator?" etc. CTV doesn't show you, right? So I think that's changing.
That show-level data, of which we're getting a very limited amount today, I think there's an opportunity for us to get basically the same amount of data we get across all the platforms on a broad basis, to get it on a granular basis in the future, which will change the dynamics of how CTV is bought, but also change the dynamics of how we sell verification across connected television.
Super helpful, and we'll talk about show-level transparency for years to come, probably.
Yep.
Early days on this. Maybe last one of the big major verticals that are driving a lot of the growth, retail media. I think DoubleVerify's measurement tags are accepted by 100-plus retail media network.
Yeah.
Supply-side revs are growing 50+%. Would love to hear just the demand from your clients as they expand beyond maybe the socials of the world,
Yeah
... CTV, the open web, and how retail media is sort of expanding that out.
Yeah, retail media is a really interesting space, and you mentioned 100 retail media networks. It's crazy. If you think of, like, Dollar General has a retail media network.
Yeah.
Right? You know, you've now put retail media. Everyone is selling advertising. If you're in the retail space, and even people who aren't in the retail space, so Uber has an ad network now, right? You know, and we work with people like Uber, with Kroger, with Amazon, with Macy's, with Target. These are all pretty large retailers. And they're using the data and their engagement with consumers to actually build an advertising business on top of it. There's no, if you think about it, there's no better way, if you're a CPG company and you're selling. You know, we work with Kroger. If you're a CPG company, who has the best data on what people are buying in stores? Kroger does, right? So to be able to target a message against those users is incredible.
You know, same thing with someone like a Macy's. If you're, you know, Ralph Lauren or, you know, a clothing manufacturer, you know exactly what someone has been looking at on Macy's. You know what they've been shopping for. You know their purchase history. Using that data to actually target those users is incredibly valuable. Our business in the retail media networks, as you noted, grew 50% last quarter. It helped drive our what we call our supply-side growth to almost 29% growth. And it's an entirely new segment for us. Now, some of those dollars were dollars that used to go to the general open web.
Okay.
But some of those dollars are totally new. Those are co-op dollars coming from certain brands, coming out of other budgets. So it's pretty interesting for us. Again, we talked about, you know, all dollars are digital now. Think about it, like, everything is going into digital media. Retail media networks are taking, like, dollars out of co-op, dollars out of in-store advertising, that now are going into digital, and it's a continually growing area. The neat thing for us, as DoubleVerify, is we work with a lot of these companies as both retail media networks, so Uber is a retail media network customer, Macy's is, Target is, and as brands themselves.
So we have this great opportunity with someone like an Uber, who uses us for their retail media network, but they're also an advertiser that uses us to verify their ad spend, too. So, we're in a really unique position to take advantage both of the retail media network business, but of those retailers themselves and their ad spend, too.
The core and then supply, like both-
Yeah
... supply and demand. So, let's talk DV specific, and we'll open up to questions in a little bit here. I think we have maybe 13 minutes left to be exact.
We've got to get the CFO to talk.
Yeah, I was about to.
We need some revenues anyway.
Let's talk about it. So, I was gonna ask about win rates here, and I'll let the both of you sort of talk. You know, I think we were at 80% win rates in 2Q, 70% of those are greenfield, 50% penetrated the top 1,000. These are stellar numbers, and I think they've been 80% for a while, maybe since going public. Would love to hear your thoughts on how do you expand that penetration of the top 100-top 1,000? And then the cohort-level data as you get into year two, year three, because I think you've talked about some accelerating growth there.
Yeah, so, I think, I mean, the win rate is really what's driving our continued growth, right? So if you think about greenfield, that's really more outside of the U.S. than in the U.S. We are not as penetrated outside of the U.S. as advertising spend, right?
Okay.
So it's only about 30% of our revenue for the measurement side of the business, but really, sort of 50% of our global ad spend is outside of the US, and that expansion is greenfield. It's clients that are coming to brand safety and brand suitability and verification in markets. We invested quite a bit to get ourselves situated in those markets so we can grow, not only with US brands that wanna expand outside the US, but actually local brands, and we're seeing very strong growth-
Mm
... outside of the U.S. That's the greenfield part of the business. In the U.S., you know, we work with 50% of the top 1,000 advertisers. That means there's the other 50%, and we can go after with a product suite that we feel is superior to what's in the market. So that's kind of the growth pattern that we're seeing in the market. It is a growing market, and we're kind of going where the opportunities are. The 80% win rate has been a pretty consistent number, and that's for, that's on wins for any product solution that wasn't available or wasn't being used by a client, right? So it's also just sort of the upsell of our new product solutions, which is really where we're gaining a lot of traction, right?
For example, we bought a company last year called Scibids. That's a product that's unique in the market. We're able to go after our existing client base and upsell them to a solution that's not available anywhere else. So it is the driver of the growth. We have net revenue retention that's around 120%, and the way we get to that is we upsell new solutions to our existing base, and then we go after greenfield opportunities.
That's at year two, three?
Yes, exactly. So on average, we have our, you know, our clients, our top twenty-five clients that are with us for over seven years, and that's at our ability to not only expand in new geographies with them, upsell them new products, and, you know, continue to kind of go deeper with the client wherever the growth is.
I just wanna hammer one thing home here. Nicola just gave a number out there. Our top twenty-five clients have been with us. Actually, it's our top fifty clients have been with us for over seven years. I mean, I would challenge you to find a software company out there who has, you know, data-
Sure
... strong as that. You know, I think that's an amazing testament-
Sure
... to not only the quality of our solution, but the stickiness of our relationship with our customers as well.
Yeah.
Super helpful, and let's stick with the finance part.
Yeah.
And I'll come back in a second.
Sure
... on the business part. Let's see, we report revenue in three different lines, I think activation, measurement, supply side-
Was that? Yeah.
Two, two-
Quick.
Three, yeah. So, activation, DV's largest line.
Yeah.
How do we re-accelerate? We just talked about social and CTV and retail media. Just talk to us how we might re-accelerate the growth there.
Yeah, so just as Nicola Allais said, all three lines are growing double digits.
Yep.
Right? So we're in a position where we're able to benefit from wherever the advertiser's spending their dollars. You're correct that in the past few quarters, years, activation has been the main driver of the growth because the dollars are going there, right? And so we kind of follow wherever we need to verify for the advertisers, but also because we had a product called ABS that really grew very strongly.
Yeah.
Now, activation still grew double digits, even though ABS did not grow double digits in the last few quarters, mainly based on some advertisers not reducing their spend levels, and they were using ABS very strongly. But within that line, we still grew double digits, and what drove that growth is everything that Mark just spoke about-
Right
... which is the Scibids product and the social activation were double-digit growth, along with the core product also growing double digits. So we are entering a phase where more lines of our revenue are growing, as opposed to having to really keep it focused just on ABS. It is a bit of a transition, right? And as Mark said, you know, we do need the social activation products to kind of close the loop with the measurement side of social, which is where the main growth is. But if you think about the profile, where we're still growing double digits in a time of transition towards social and closing that loop, you know, that's a very strong proposition, right? Supply side, I just want to mention the supply side. You mentioned 50% growth on the retail side.
That, that is what drove the 26% that we saw on the overall supply side line. It is a smaller revenue driver for us, but the fact that it's growing so fast around retail media, which is one of the opportunities we have to continue to grow, is also a sign of where, you know, we're gonna see growth. Overall, I would say, you know, I will give two stats, which is social is not even 20% of our total revenue. So if it's 60-70% of all spend, it's only 20%, you know, you do see the opportunity there to continue to grow. International, I already mentioned it, it's only 30% of our measurement. It's over 50% of all revenue, digital advertising spend.
Those are the drivers that we know at some point, you know, our revenue mix will look like our advertisers spend, and we have a lot of opportunity to continue to grow with that double digits on all of our lines.
Nico, just to hammer home on those few brands-
Yeah
... that might have pulled back.
Yeah.
People talk about the six, the cohort-
Yeah
... talk to us about where we are with those. Any update on?
Yeah, so it's an uneven, uneven pattern of spend. This is what we've said all along for the whole year. It is a large gap toward our expectations that this group would continue to grow. So the unevenness remains, right? We said, you know, it didn't help or hurt. It didn't get worse or better through the second quarter, but it is an uneven pattern for large advertisers. Three of the six are in our top ten, so obviously, it has a material impact on our overall trajectory.
Why did they pull back?
You know, these were specific issues related to the advertisers. So what's important to us is they didn't turn off service.
Right.
Right, but they were heavy users of ABS. So as they lowered their ad spend levels, you know, we saw an outsized impact on ABS in particular. What's important for us is they didn't turn off the service. They didn't go to another provider. This is just intrinsic issues within the advertisers that has created a cohort that's spending less. We think overall this will be a cohort that will have a moderate decline in the year-
Mm-hmm
... right, in their ad spend, and which is reflected in our revenue. So it's obviously a drag to our numbers. But even then, you know, we still did grow double digits on all of our lines.
Right. And then, you know, hard to... I gotta get you- so let's open up for questions.
Okay.
I've got several others, but are there any questions in the audience? Yes.
Oh.
Wait for a mic. Yeah.
Yes, thank you for sharing so much information. So you just mentioned that advertisers are increasingly focused on the short-form video, and then the creator, actually, because they are aware, doesn't make a difference, but the technology. So because you are doing the measurement and the verification for these clients on these three platforms, TikTok, Reels, and the YouTube Shorts, how would you rank their accuracy? You say TikTok is a hundred. Like, where are Reels and YouTube Shorts in terms of their targeting accuracy and X?
with their internal tools and their ability to...
I'll just be direct. I'm not an advertiser, so I couldn't tell you how accurate their advertising tools are. I know that our engagements with all three platforms are similar, so we provide the same level of verification, the same level of suitability measurement across all three platforms. So I couldn't tell you how strong their other tools are across the different platforms. Sorry.
Is there a volume way to think about it? TikTok volume here, Shorts. Are you seeing more volume in one platform than the other?
Yeah, I mean, TikTok, I think from a short-form video perspective, we're seeing the most, I think just because, again, we're gonna be biased based on where our advertisers spend.
Yeah, yeah.
So I think, TikTok is still probably the largest, the short-form video, engagements that we've seen. But, I mean, look, Shorts and Reels are big, and YouTube remains, you know, our largest platform-
Yeah
... social platform that we engage with.
Helpful. Any other questions? Yeah. We have a mic coming.
... Oh, just to follow up on the large advertisers that pulled back, have you seen any increased visibility since Q2? And, like, what gives you confidence that, you know, they're gonna return to the same solutions in a reasonable near future?
Yeah. Yeah, I'll take that. So as I said, they didn't turn off the service, so really the question is about ad spend patterns within the six. And we've spoken in the past about some of the six advertisers that have intrinsic issues, where they're not likely to come back to the same levels of spend as they were in the past because, you know, they have internal considerations that have reduced their ad spend. So the visibility hasn't improved. It's still an uneven pattern, and that is not a comment that's changed. It's still uneven. And, you know, coming out of the year, you know, it's pretty clear that some advertisers won't come back to the same levels they were before.
You have three lines of revenues, and could you comment on the revenue model? Are they pretty much all based on volume, and then maybe you have different tiers, and the more you spend, you probably have to...
Yeah
... cost less per impression?
Sure. So we have three lines of revenue. We report on three lines. Two of it, 90% is for measurement and activation, and that is the advertisers paying us, and the way they are, that we're getting paid is a fee per impression that we measure. So the driver there is obviously volume, right? The more volume we see, you know, that is what's driving our revenue growth. Within that, if you think about the model, we're not really tied to the CPM or the media buy, right? So we don't take a take rate on the ad spend, so we're less susceptible to deviations on the CPM side. For us, it's all about impressions and just being able to verify more and more impressions.
So as the market grows and more dollars go to digital, you know, we benefit from that directly 'cause we're just paid per impression. The third part of the business, which is growing very fast, 20%-26%, that's less than 10% of our revenue, and that's more of a SaaS model, where we sell our data to platforms for them to do basic level brand safety and fraud before that inventory is sold to the advertisers. So ultimately, we really are tied to an advertiser using our services.
Third line is supply side.
Supply-side, that's correct. Yeah.
So we might have time for one more, or we're about to go into overtime.
OT, OT.
Okay. We have one more-
Yeah
... and then we gotta wrap.
Yeah.
Hey there. Can you talk a little bit about the Scibids go-to-market strategy? Just maybe how that's evolving, and any early learnings there would be great.
GenAI did not come up until now.
I mean, it comes after. Yeah. So very quickly, Scibids is our algo-based optimization tool that we insert into our activation business. So think of our current activation business as very much a binary decision. It allows an advertiser to say yes or no to bidding on an impression based on data we provide. What Scibids allows us to do, it allows us to say maybe. So based on a KPI on the other end, based on the price of the impression, maybe this is not considered viewable by industry standards, but if I get it cheap enough, and if it drives a result, I'll bid on it. So basically, what Scibids does is it allows us to look at a spectrum of decisioning as opposed to a binary decision.
That being said, so Scibids, initially, you know, we brought it in, and we've now integrated the entire solution into our solution. We're pulling, for example, our attention data into Scibids now, which allow advertisers to make decisions, based on attention scores. So think of that as a version of viewability, how engaged a user is. The go-to-market right now, we have got eight of our top 100 customers that we've sold so far this year using Scibids. We continue to scale, that business. We've said, you know, in the next, four years, so we announced last year, that it would be a $100 million business. I think we're well on our way to that trajectory. And the nice thing about it, as Nicola noted, it's a real differentiator.
Yeah.
No one, you know, none of our competitors have a solution like that, to the point where we now have advertisers who use our competitors' solutions for measurement, using Scibids for optimization, because they don't have a tool to do so. So the go-to-market now is we're bundling it, with a lot of our solutions, our activation solutions. We're reaching out to advertisers who don't even use us for measurement, and we've been able to penetrate those as well.
With that, we didn't get a chance to talk about Oracle and we did not get a chance to talk about gross margins that are expanding.
Yeah.
And a bunch of other stuff. There's a lot-
Is that a real statement?
So anyway, Mark, Nicola, thank you very much for the time.
Thank you.
Very much enjoyed it.
Thanks.
Thank you.